25 state attorneys general support rescinding "rent-a-bank" rule

In October 2020, the Office of the Comptroller of the Currency, one of the federal agencies that regulates banks, issued a rule that determines what national bank or federal savings association is considered the “true lender” in circumstances where a bank and a third party have a role in the loan. Many consumer advocates expressed concern that the rule would allow lenders to evade these state usury laws, which cap interest rates.

Payday loans are subject to state usury laws. Federal bank loans generally are not. Therefore, predatory lenders have sometimes tried to evade the usury laws by working with a bank: putting the bank’s name on the loan document and then “buying back” the loan. The lender then claims that it is just a “servicer” for a bank loan that is exempt from state interest rate caps.

On March 25, 2021, Senate Banking Committee Chairman Sherrod Brown and Sen. Chris Van Hollen introduced a Congressional Review Act resolution to rescind the rule. The National Consumer Law Center, which strongly supports the CRA resolution, has written that the OCC rule protects predatory lenders at the expense of consumers and “helps triple-digit interest rate loans evade state and voter-approved interest rate caps.”

Now, 25 state attorneys general have written a letter urging Congress to use the CRA resolution to rescind the OCC rule. The letter is here.

Under the CRA, Congress has until mid-May to pass the resolution, which is not subject to filibuster.

Craig Cowie article takes CFPB to task for not bringing COVID enforcement cases

Craig Cowie of Montana has written Is the CFPB Still on the Beat? The CFPB'S (Non)Response to the COVID-19 Pandemic, 82 Mont. L. Rev. 41 (2021). Here's the conclusion:

More than ten months into a historic pandemic that has wreaked economic devastation, the CFPB—the primary Federal consumer financial protection regulator that was created in response to the last economic crisis—had not taken a single public enforcement action to address the fallout from the pandemic despite thousands upon thousands of consumer complaints and its own knowledge of ongoing problems. The CFPB can—and must—change its enforcement strategy to bring cases now to protect the consumers being harmed during the pandemic. The CFPB cannot solve every problem facing consumers as a result of the pandemic. But it can help keep consumers from falling into an economic abyss while the country addresses its larger problems. By concentrating on unlawful conduct that undermines or evades laws designed to protect consumers during the pandemic, that makes it harder to keep a job, stay in a home, or recover after the pandemic recedes, or that hurts those who are already suffering more, the CFPB can signal to the marketplace that consumer protection laws will be enforced, even during a pandemic, and that the cop is still on the beat.

Are we going to see UDAAP statutes used against discrimination? The Student Borower Protection Center hopes so

The SBPC issued a report, DISCRIMINATION IS "UNFAIR": Interpreting UDA(A)P to Prohibit Discrimination. Here's the Executive Summary:

This Article explores a theory that discrimination is a type of “unfair” practice covered by federal and state laws prohibiting unfair, deceptive (and sometimes abusive) acts and practices (“UDA(A)Ps”). An “unfair” practice is defined by statute as something “(1) likely to cause substantial injury to consumers; (2) which is not reasonably avoidable; and (3) that is not outweighed by countervailing benefits to consumers or competition.” Discrimination fits neatly within this statutory language, and its incorporation as an unfair practice is consistent with the purposes and traditional guardrails around application of UDA(A)P law, as well as general principles in civil rights jurisprudence. Applying the “unfairness-discrimination” theory would fill important gaps in the existing patchwork of antidiscrimination laws, which currently leave large swaths of the economy unregulated and unprotected from a variety of discriminatory practices, including those with a disparate impact. By taking seriously the plain language of UDA(A)P law, federal entities like the CFPB and FTC, state attorneys general and agencies, and in some cases private individuals, could make great strides towards ensuring that entire markets and industries are not free to discriminate.

As for the view of CFPB nominee Rohit Chopra on using the Bureau's UDAAP statute in this way, the report notes "FTC Commissioner Rohit Chopra—recently nominated to be the next Director of the CFPB—has advocated this theory, noting that '[d]iscriminatory practices often are three for three [referring to the requirements for finding conduct unfair], causing grievous harm that cannot be avoided.'”

READ ABOUT THIS: Objecting lawyers allege that Monsanto is paying a tort plaintiff to appeal a trial-court judgment *favorable* to Monsanto! Yes, you read that right.

Some lawyers (I'll call them "objecting lawyers") say that they got wind of an effort by Monsanto to pay a tort plaintiff to appeal a claim that the plaintiff lost in federal district court. Why? According to the objecting lawyers, because Monsanto wants to keep the case alive to try to obtain a Monsanto-favorable federal-preemption ruling on appeal. The appeal, No. 21-10994, is pending in the Eleventh Circuit.

The objecting lawyers have filed these papers (including a motion, a letter brief, and a declaration), which I urge you to read in full. Here is a brief excerpt:

The issues raised in the attached letter brief and accompanying declaration address the "settlement" agreement between the Appellant and Appellee in Carson, which directly impacts the justiciability of this appeal. Indeed, as explained in the attached letter and accompanying declaration, the Carson appeal is being prosecuted in bad faith. The Appellee (Monsanto) is paying the Appellant (Carson) to appeal a decision that the Appellee already won in the District Court because the Appellee is hoping to secure favorable appellate precedent in this Court. This pay-to-appeal scheme is fundamentally improper and must be brought to the Court's attention.

I hope that the Eleventh Circuit demands, at a minimum, the public filing of the alleged settlement agreement between Monsanto and the plaintiff.

Questions: 1. Is the alleged settlement agreement ethical? Decent? Good for America?

                 2. If you were Monsanto's lawyer would you participate in a deal like the one the objecting lawyers allege occurred here?

                 3. Is the appeal, as it is now apparently presented to the Eleventh Circuit, a case or controversy? Or Is it a "feigned case" that is no longer justiciable? 

                 

Supreme Court holds that monetary relief is unavailable under Section 13(b) of the Federal Trade Commission Act

The first paragraph of the Court's unanimous opinion in AMG Capital Management v. FTC sums it up:

Section 13(b) of the Federal Trade Commission Act authorizes the Commission to obtain, “in proper cases,” a “permanent injunction” in federal court against “any person, partnership, or corporation” that it believes “is violating, or is about to violate, any provision of law” that the Commission enforces. 87 Stat. 592, 15 U. S. C. §53(b). The question presented is whether this statutory language authorizes the Commission to seek, and a court to award, equitable monetary relief such as restitution or disgorgement. We conclude that it does not.

The Court also explains (at pages 1 to 2 of the opinion) that the company in question ran a payday loan scheme involving $1.3 billion in "deceptive charges."

Want to track all insurance coverage litigation concerning Covid?

Then go to Covid Coverage Litigation Tracker, which is run by U. Penn and U. of Connecticut law schools. To read more about the establishment of the tracker, go here.

CFPB rule: Tenants can hold debt collectors accountable for illegal evictions

The Consumer Financial Protection Bureau today issued an interim final rule in support of the Centers for Disease Control and Prevention’s eviction moratorium. The CFPB’s rule requires debt collectors to provide written notice to tenants of their rights under the eviction moratorium and prohibits debt collectors from misrepresenting tenants’ eligibility for protection from eviction under the moratorium.

The CFPB stated: "The CDC has established the eviction moratorium to protect the public health and reduce the spread of the virus. Debt collectors who evict tenants who may have rights under the moratorium without providing notice of the moratorium or who misrepresent tenants’ rights under the moratorium can be prosecuted by federal agencies and state attorneys general for violations of the Fair Debt Collection Practices Act and are also subject to private lawsuits by tenants."

The interim final rule is here. A press release summarizing the rule is here.

"Why Ralph Nader wants you to know about tort law"

Cartoonist Matt Wuerker enlists consumer advocate Ralph Nader to help explain tort law in this 3-minute video from Politico.

Fiery Senate Hearing on Student Loans

Forbes has an account here. Forbes has a paywall but if you haven't read any Forbes articles this month, you should be able to read the article. There's a lot in the article worth reading, but here's a short excerpt:

Senator Warren opened the hearing by highlighting how student loan debt exacerbates the racial wealth gap, noting that, “After 20 years, the median Black borrower still owes 95% of the original amount borrowed." Dr. Dominique Baker, Assistant Professor of Education Policy at Southern Methodist University, later examined this in further detail, arguing that, “The burden of student loan debts disproportionately falls” on Black borrowers due to “centuries of structural forces shaped by the deliberate decisions of those in power. Structural racism has denied Black families the ability to build wealth to pay for college.”

 *  * *

Navient has come under withering criticism for its student loan practices. Last month, a state court in Washington concluded that the company had deceived scores of private student loan borrowers and cosigners about their ability to release the cosigner on a student loan at a later date if certain criteria were met — such as by making on-time payments for consecutive months over the course of years. In February, a federal administrative law judge ruled that Navient must repay the government over $22 million for allegedly overcharging the Department of Education for student loan subsidies. And student loan borrowers tried to force Navient into an involuntary bankruptcy last month for allegedly charging borrowers for student loans that had already been discharged; a judge ultimately dismissed that suit, which Navient had claimed was frivolous.

Meanwhile, a long-running lawsuit against Navient brought by the Consumer Financial Protection Bureau (CFPB) — an agency that Senator Warren helped establish in the wake of the 2008 financial crisis — is ongoing. * * *

Senator Warren said to Mr. Remondi during the questioning phase of the hearing that given the ongoing allegations of wrongdoing, “the federal government should fire Navient — and the federal government should fire you.” During subsequent questioning by Senator Bob Menedez (D-NJ), Mr. Remondi admitted to being “well compensated” by Navient, earning upwards of $20 million in compensation over the course of several years, despite the avalanche of allegations of misconduct by the company.

Short but Sweet Amicus Brief on E-discovery

It’s not often (or ever) that I would post an amicus brief on e-discovery, but I’m making an exception today.

Brian Morrison, a partner at Tadler Law, drafted an excellent trial court amicus on the narrow issue of e-discovery of emails that use hyperlinks (an increasing practice) instead of PDFs that are actually attached.

It’s a perfect amicus brief—seemingly written just to help the court on nuances of e-discovery. I’ve managed to avoid truly complex e-discovery issues, so the brief was an educational experience for me.

The National Association of Consumer Advocates and Public Justice were the amici. Leah Nicholls and Karla Gilbride at PJ both edited Brian’s writing, and I picked at it as well on behalf of NACA.